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09/12/2002PENSION ADVISORY COMMITTEE MEETING CITY OF CLEARWATER September 12, 2002 Present: Whitney Gray Acting Chair/Commissioner John Lee Committee Member John Schmalzbauer Committee Member Tom Jensen Committee Member Hoyt P. Hamilton Committee Member/Commissioner Frank Hibbard Committee Member/Commissioner Empty seat Committee Member Also Present: Richard Ebelke Interim Human Resources Director Lee Dehner PAC Attorney – departed from 9:16 to 9:50 a.m. Debbie Ford Human Resources Analyst Patricia O. Sullivan Board Reporter The Chair called the meeting to order at 9:03 a.m. at City Hall. To provide continuity for research, items are in agenda order although not necessarily discussed in that order. ITEM #2 – Selection of Chair & Vice-Chair (Tabled) ITEM #3 - Approval of Minutes A typo was noted on page one, regarding Joseph Egger’s first name. Member Schmalzbauer moved to approve the minutes of the regular meeting of August 2, 2002, as corrected. The motion was duly seconded and carried unanimously. ITEM #4- Employees to be Heard - None. ITEM #5- Action Items a) Review and Action on Employee Requests for Years of Service Pension 1. John Berrien – Public Services Tech II, Public Utilities Member Jensen moved to approve a Years of Service Pension for John Berrien. The motion was duly seconded and carried unanimously. b) Review and Action on Employee Requests to Vest Pension 1. Darold Brink – Tradesworker II, Marine & Aviation Darold Brink has resigned his position after being employed by the City for more than 19 years. He will qualify to receive his reduced pension beginning July 1, 2003. 2. Irene Gaccek – Life Hazard Safety Inspector, Fire Department Irene Gaccek has resigned her position after being employed by the City for more than 14 years. She will qualify to receive her reduced pension beginning September 1, 2008. Member Lee moved to approve the request by Darold Brink and Irene Gaccek to vest their Pensions. The motion was duly seconded and carried unanimously. c) Approval of New Hires as Pension Plan Members As of September 4, 2002, the City had 1729.48 FTEs out of 1834.7 budgeted positions. Member Hamilton moved to accept the following employees into membership in the Pension Plan: Date of Pension Employment Elig. Date William Harding, Police Officer Police Department 7/15/02 7/15/02 Kimberly Burdette, Police Information Tech Police Department 7/15/02 7/15/02 Patricia Petsch, Staff Assistant Police Department 8/12/02 8/12/02 Todd Vaughan, Rec. Program SupportTech Parks & Recreation 8/12/02 8/12/02 Tyrone Mathis, Solid Waste Worker General Svcs/Solid Waste 7/15/02 7/15/02 Felicia Swann, Police Comm Oper Trainee Police Department 7/15/02 7/15/02 Frank Silvio, Custodial Worker Marine & Aviation 8/17/02 8/17/02 Nathaniel Vint, Electronics Technician Engineering 8/26/02 8/26/02 Sam Kambourolias, CAD Technician Engineering 8/26/02 8/26/02 Jason Herman, CAD Technician Engineering 8/26/02 8/26/02 Krzysztof Moleda, Custodial Worker General Svcs/Solid Waste 8/12/02 8/12/02 The motion was duly seconded and carried unanimously. ITEM #6 - Pending/New Business a) Evers Maxie – Hearing for Non-job-connected Disability Pension Interim Human Resources Director Richard Ebelke recommended the hearing on Evers Maxie’s request for a non-job-connected disability be tabled until controversy regarding the committee’s 7th member is resolved to avoid a tie vote. Concerns were expressed a delay would be unfair to the applicant, who is in a no-pay status. It was stated the committee reaches many decisions without all members present In response to a question, Mr. Ebelke said City departments provide input prior to the issuance of Human Resources Department statements, which represent the City’s position. Mr. Maxie is not qualified to perform another position. PAC (Pension Advisory Committee) Attorney Lee Dehner said the hearing must be noticed properly. The claimant can request the hearing be held, knowing that a tie could occur. Consensus was to schedule the hearing at the earliest possible time. b) Christiansen & Dehner Contract/Legal Expenses On October 15, 2001, the Trustees approved $30,000 for Christiansen and Dehner for legal and related services for the period October 1, 2001 – September 30, 2002. On November 13, 2001, the Trustees approved an additional $5,400 to Christiansen and Dehner for attendance at investment committee meetings. To date, $2,681.77 has been spent. On January 22, 2002, the Trustees approved an additional $5,000 to Christiansen and Dehner to modify existing money manager contracts. There have been no expenditures on this item to date. On March 18, 2002, the Trustees approved an additional $40,000 for Christiansen and Dehner for general pension legal services for a new total for general pension legal services of $70,000. Through June 30, 2002, $62,421.34 has been spent, leaving a balance of 7,578.66 for the 3 remaining months of this year (July - Sept 2002). Staff feels that an additional $20,000 will be needed to complete the year. The Employee Pension Plan has been using Christiansen and Dehner since May 1999 (over 3 years). Staff would like direction regarding legal services for the pension plan for fiscal year 2002/03. Options include: 1) Renew contract with Christiansen and Dehner for period 10/1/02 – 9/30/03; 2) Extend contract with Christiansen and Dehner on a month to month basis starting 10/1/02; and 3) go out for a RFP (Request for Proposals) for legal services for the Pension Plan. In response to a question, Finance Director Margie Simmons said it was difficult to determine the number of hours the firm spent rewriting the Pension Plan, as work on PAC and rewrite issues were done simultaneously. It was recommended the City request more accurate reports in the future. Ms. Simmons said the City had hired the law firm of Gray Harris for legal services related to the pension plan because Christiansen & Dehner do not handle litigation. In response to a question, she said staff has not received Christiansen & Dehner’s July bill for analysis. Services related to pension changes were not anticipated at the beginning of the fiscal year. Also, the law firm now pays for pension related medical expenses on behalf of the City. Ms. Simmons expressed concern regarding the use of Plan resources as the firm charged $250 to write a letter requesting medical information. It was felt the cost for travel and vehicle use is too high. It was suggested a lower cost could be negotiated. It was recommended a RFP (Request for Proposals) be issued for these services. Ms. Simmons said the level of service requested would have to be determined. It was recommended the City consider a firm that could provide all legal services related to the Pension Plan. It was stated few law firms in Florida provide these types of services. Ms. Simmons suggested costs could be lowered if the number of meetings where the firm’s presence is required was reduced. It was felt the firm’s presence at quarterly investment meetings is important. It was stated the firm’s quality of work is not in question but it was felt the increase from $30,000 to $100,000 is significant and should have been anticipated. It was suggested the firm’s presence might not be necessary at Pension Trustees meetings when no controversial issues are being considered. It was stated the firm’s attendance at Investment Committee meetings had been approved for a 6-month trial period. Support was expressed for retaining the firm’s presence at these meetings. Ms. Simmons suggested the firm could counsel the Pension Trustees at their meetings, rather than attending the Investment Committee meetings. Member Hibbard moved to recommend the Pension Trustees ratify and confirm an increase in the amount authorized to be spent with Christiansen & Dehner for legal and related services by $20,000 for a not to exceed cost of $100,400 for the one-year period ending September 30, 2002, approve extending the contract to Christiansen and Dehner on a month-to-month basis starting October 1, 2002 for up to $25,000, and provide direction to staff for acquiring legal services for the plan for fiscal year 2002/03 and to recommend a RFP be issued for Pension Plan legal and related services. The motion was duly seconded. Opposition was expressed to issuing a RFP. It was felt due diligence requires the issuance of a RFP. It was felt it was not worth the expense of issuing a RFP. In response to a question, Ms. Simmons said the only costs are related to work by staff and the PAC. Staff would not charge the plan extra for their efforts. It was stated the law firm of Christiansen and Dehner does a good job. It was stated Investment Committee members welcome the firm’s presence at their meetings. In response to a question, Ms. Simmons said issuing a RFP every three years is not unusual nor would it be out of bounds to extend the contract for another year. It was felt meal and travel expenses for Christiansen and Dehner are too high. Upon the vote being taken, Members Hamilton, Hibbard, and Chair Gray voted “Aye”; Members Lee, Schmalzbauer, and Jensen voted “Nay.” Motion tied and failed. Member Lee moved to recommend the Pension Trustees ratify and confirm an increase in the amount authorized to be spent with Christiansen & Dehner for legal and related services by $20,000 for a not to exceed cost of $100,400 for the one-year period ending September 30, 2002, approve extending the contract to Christiansen and Dehner on a month-to-month basis starting October 1, 2002 for up to $25,000, and provide direction to staff for acquiring legal services for the plan for fiscal year 2002/03. The motion was duly seconded and carried unanimously. Concern was expressed PAC direction to the Pension Trustees may be unclear. Member Hibbard moved to recommend the Pension Trustees issue a RFP for Pension Plan legal and related services. The motion was duly seconded. Members Hamilton, Hibbard, and Chair Gray voted “Aye”; Members Lee, Schmalzbauer, and Jensen voted “Nay.” Motion tied and failed. c) Gray Harris Legal Expenses On November 13, 2001, the Trustees approved an expenditure in the amount of $5,000 to the law firm of Gray Harris for legal services related to the pension plan. These legal services related to the analysis of Social Security obligations under an opt-in provision and a DROP (Deferred Retirement Option Plan). The City has a contract with the law firm of Gray Harris to perform legal services not related to pension issues. Unfortunately, the costs for these services exceeded our previous estimate, and an additional sum is needed. We currently have invoices totaling $18,655.50 with some additional expenses anticipated. Concern was expressed the estimate of costs was significantly lower than the final charges. Ms. Simmons did not know the origin of the $5,000 estimate. It was noted these expenses are related to one-time issues. In response to a question, Ms. Simmons said the Legal Office uses the firm of Gray Harris for other issues and had recommended them. The firm was hired under a blanket purchase order for less than $25,000. Member Hamilton moved to recommend the Pension Trustees ratify and confirm an increase in the amount authorized to be spent with Gray Harris for legal and related services by $20,000 for a not to exceed cost of $25,000. The motion was duly seconded and carried unanimously. d) Pension Expenditures for Fiscal Year 2002/03 The Employees’ Pension plan does not have a legal requirement to have a budget. The Trustees must approve all expenditures. For the sake of efficiency, staff is requesting approval of the following routine expenditures, which include routine and small dollar amounts. Medical Bills covers medical services authorized by the PAC. Travel covers two trips: 1) attendance for two people at the Callan training seminar and visit to Callan, the pension plan’s performance measurement firm and 2) training for two people with the Plan’s new custodian. Printing and Binding is for the statutorily required annual information distribution to Pension Plan members. Training is for the mandatory training required by State statute. Money Manager, Safekeeping Service, and Pension Administrator fees, set by contracts approved by the Trustees, are not included in this administrative budget. Reimbursement to the General Fund and Self-Insurance fund covers plan oversight costs and is recognized as revenue to the General Fund and Self-Insurance Fund. Anticipated expenses: 1) Medical Bills - $6,000; 2) Physicals - $35,000; 3) Travel Expenses - $4,500; 4) Training - $1,000; 5) Printing - $750; 6) Miscellaneous - $250; 7) Reimbursement to General Fund - $77,000; and 8) Reimbursement to the Self-Insurance Fund - $2300. In response to a concern, Cash & Investments Manager Steve Moskun said medical bills to cover physicals for new plan members are paid separately from medical bills related to disability claims. It was stated the City needs to establish a baseline for firefighter and police exposure to high-risk diseases. Mr. Moskun said the budget does not fund that study. It was requested staff report on the cost of a study. Mr. Dehner said the City is not required to provide medical evidence that personnel were not previously exposed to high-risk diseases. He said plan members are responsible for providing medical evidence that no prior infection exists. Member Jensen moved to recommend the Pension Trustees approve the recommended administrative expenditures for Fiscal Year 2002-03 totaling $147,500 for the City of Clearwater Employees’ Pension Plan. The motion was duly seconded and carried unanimously. ITEM #7- Director's Reports The next PAC meeting is scheduled for October 10, 2002. Mr. Ebelke reported Cathy Slack has requested a disability hearing in November. As all documentation and the completion of all depositions are necessary prior to the hearing, it was recommended the hearing be scheduled once the entire record is complete and available. Mr. Dehner reviewed new regulations related to the Pension Plan and its fund managers. ITEM #8- Committee Members to be Heard It was reported Joseph Egger had filed a lawsuit against the City to retain his position as the 7th member of the PAC. It was requested staff report to PAC members regarding PAC related actions. It was stated the empty seat cannot be filled until related legal issues are resolved. ITEM #9- Adjournment The meeting adjourned at 10:09 a.m.